The European Union has handed Google a $5bn fine for breaching monopoly rules in a case regarding the Android smartphone operating system.
The European Commission (EC) had taken issue with Google forcing manufacturers to pre-install Google Search and Google Chrome apps on devices that run on Android.
Likewise, Google had also prevented manufacturers from selling devices that used operating systems based on the Android open source code. It also offered incentives to those manufacturers that agreed to exclusively pre-install Google Search on their devices. Google would only offer access to its digital services, such as the Google PlayStore, if manufacturers agreed to its demands.
The EU argued that this was a violation of antitrust rules, claiming that Google was using its power to unfairly stop its competitors from operating.
The EC could impose a fine of up to 10% of parent company Alphabet’s annual turnover, or approximately $8.4bn.
European Commissioner for Competition Margrethe Vestager decided against the maximum punishment. However, the $5bn fine is still the largest ever antitrust fine imposed by the regulator against a single firm.
The EC has given Google 90 days to change its business practices. If it doesn’t, the company faces a second fine of up to 5% of its average daily turnover.
The free-to-use Android operating system currently powers more than 85% of the world’s smartphones.
Speaking via a Google blog post back in 2016, Kent Walker, Google’s general counsel, said that “Android hasn’t hurt competition, it’s expanded it”.
However, Vestager disagreed. Announcing the record-breaking fine, she insisted:
“Google has used Android as a vehicle to cement the dominance of its search engine. These practices have denied rivals the chance to innovate and compete on the merits.”
Vestager’s war on big tech
This is the EU’s latest case against Google as Vestager wages war on Silicon Valley’s tech giants.
Her department issued a €2.4bn fine against Google last year in relation to its Google Shopping price comparison service. The commission accused Google of unfairly promoting its own price comparison results on Google Search results, while denying competitor websites the chance to compete.
Google has since lodged an appeal against the fine with Europe’s high court, with a decision likely to take years to materialise. That could offer some indication of how this case will pan out.
However, this is a clear indication that Vestager won’t let up in her aggressive approach towards handling the big tech companies.
She has previously overseen the decision to force Apple to pay $15bn in unpaid taxes to the Irish government. Likewise, she also handed Facebook a $129m fine for misleading antitrust officials during the acquisition of messaging app WhatsApp..
Verdict deals analysis methodology
This analysis considers only announced and completed artificial intelligence deals from the GlobalData financial deals database and excludes all terminated and rumoured deals. Country and industry are defined according to the headquarters and dominant industry of the target firm. The term ‘acquisition’ refers to both completed deals and those in the bidding stage.
GlobalData tracks real-time data concerning all merger and acquisition, private equity/venture capital and asset transaction activity around the world from thousands of company websites and other reliable sources.
More in-depth reports and analysis on all reported deals are available for subscribers to GlobalData’s deals database.